Teenagers can be quite the experts when it comes to spending money. The problem is, many never really learn how to save their money, manage it effectively, and make it grow over an extended period of time. A third or over 30% of US teenagers don’t maintain an active bank account on their own, depending on their parents’ credit cards and Venmo accounts to make payments for everyday purchases.
Teenagers usually don’t get help in the classroom either, with money management not being taught or poorly taught in schools. That’s why it’s no surprise that the US ranks 14th globally when it comes to financial literacy, a knowledge gap that results in lack of adequate savings, mounting debt and even bankruptcy in many cases.
This is exactly the type of cycle that Copper Banking plans to end with its teen-first banking accounts, which aims to bring together the seamless mobile banking experience teens expect with the financial education they might be missing.
Copper’s management confirmed that they’ve finalized a $13.3 million seed round from new investors: Clocktower Ventures, Index Ventures Scout Fund, Launchpad Capital, Financial Venture Studio, Maven Ventures, Fiat Ventures, Samsung Next and Arnold Ventures, and lead investor PSL Ventures.
Where other youth-focused virtual banks lean mostly on advertising to increase awareness about their brand, Copper Banking depends on a network of youth ambassadors who aim to promote the platform through their schools, clubs as well as sports teams.
For teenagers, this usually means fewer fees. For Copper, it’s a better business model that significantly increases trust and adoption while lowering overall acquisition costs.
Copper Banking has been co-founded by CEO Eddie Behringer and CFO Stefan Berglund, who have also previously launched Snap! Raise, one of the largest youth-focused crowdfunding platforms.
Copper, which went live earlier in 2021, now has more than 350,000 users on its platform, with around 70% of users from organic sources (like word of mouth).
“Copper is teen-first banking and a teen’s first bank account. We provide this generation with the cheat codes to saving that we all wished we had earlier in life,” stated Behringer.
He added:
“Access alone does not equal literacy. Despite having the greatest digital access in history, we still have astronomical credit card and student loan debt. If we want to put a generation of teens onto firmer financial footing, we have to reimagine the banking experience.”
Copper Banking offers an FDIC-backed virtual bank account that is linked to 50,000 ATMs. Teenagers get a personalized Copper debit card, peer-to-peer payments, direct deposit and automatic savings options.
Parents are able to link up their bank accounts to Copper Banking cards to offer automatic ‘teen salary’ allowance. Additionally, they get alerts and smart controls over spending behavior. Copper provides co-parent functionality for separated parents that may be living in different households. The average Copper client is 15 years of age and also refers another friend, which does not include their siblings.
“The teen market is incredibly attractive for neobanks, but teens don’t want one imposed on them by their parents,” added Ben Savage, Partner at Clocktower Ventures.
Ben also noted:
“Copper has the brand, the product and the go-to-market model to fill that void, and we’re extremely excited to support Copper as they continue to build on the strong organic growth they are already seeing.”
Previously, Copper Banking has acquired $4.3 million in seed funding back in August of last year. Clocktower Ventures and other new investors decided to invest subsequently, after seeing the steady growth. The total funding has now reached $13.3 million.
The firm will use the proceeds to continue the development of its banking platform and products, and also to support customer adoption in various markets. Headquartered in Seattle, the firm is recruiting across multiple departments such as engineering, compliance, marketing, sales and overall operations.